08 marketing

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Section 8: Strategic Marketing

British Columbia Food Processors Reference Manual 8-1

Section 8 Marketing

MA RK ETING .................................................................................8 -2 STAGE 1: THE MISSION STATEMENT .........................................8 -3 STAGE 2: OVERALL COMPANY OBJ ECTIVES.............................8-3

Types of Objectives.................................................................................................8-4

STAGE 3: COMPETITI VE STRATEGIES .......................................8-6Types of Competitive Strategies .............................................................................8-6

STAGE 4: MARKET IN G OBJ ECTIVES ..........................................8-7STAGE 5: MARKET IN G STRATEGIES..........................................8 -8 STAGE 6: MARKETING PROGRAMS.............................................8-9 STRATEGIC MARKETIN G FL OWCHART .....................................8 -10 ADDITI ONAL RECOMMEN DED REFERENCES ............................8 -11


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Market ing

arketing is a general term used to describe all the steps that lead to finalsales. It is the process of planning and executing pricing, promotion anddistribution to satisfy individual and organizational needs.

From this definition, it is easy to see that marketing is more than just the process ofselling a product or service. Marketing is an essential part of business, and withoutmarketing, even the best products and services fail.

Companies constantly fail because they do not know what is happening in themarketplace, and as a result, they are not fully meeting their customer's needs. There isa misconception that consumers will buy anything they are offered with the properamount of advertising. Marketing begins with the customer.

Marketing consists of making decisions on the four P's:

Product (Section 9: Developing a Quality Product);

Pricing (Section 10: Pricing);

Promotion (Section 11: Promotion); and

Place (Section 12: Place - Distribution of a Product);

Before a business owner can decide on the four Ps, he/she must devise a plan. A planprovides a business with guidance on making decisions. This chapter includesdirections on how to devise a plan that will assist in making decisions about the four Psof marketing. This type of plan is a six stage process that is commonly referred to asstrategic marketing.

Once you have completed reading this chapter, it is advised that a written strategicmarketing plan be devised following the six stage process.

The Six Stages in Developing the Strategic Marketing Plan involve developing:1. Mission Statement2. Overall Company Objectives3. Competitive Strategies4. Marketing Objectives5. Marketing Strategies6. Marketing Programs

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St age 1: The Miss ion St at em ent

he first stage in strategic marketing is the development of a mission statement.A mission statement is a brief description of a company, generally no more thana few lines, that describes where the company is and where it wants to go.

A good mission statement should contain:

target customers and markets;

principal product and services;

geographic domain;

core technologies used;

commitment to survival, growth, and profitability;

key parts of the company's philosophy;

company self-concept; and

company's desired image.

The following in an example of a mission statement:

The Vancouver Board of Trade:

Our mission is to work in the enlightened interest of our members to promote,enhance and facilitate the development of the region as a Pacific centre for trade,commerce and travel. The Board strives to enable and empower its members tosucceed, grow and prosper in the global economy2.

Do not expect a mission statement to be developed quickly. It generally takes several

revisions before a complete mission statement is written.

St age 2: Overal l Com pany Objec t ives

nce a mission statement has been created, the company can then developobjectives. Objectives are specific goals to be achieved by the business.They are plans that will help a company move towards the mission statement.A business normally creates both one and three year objectives. Examples of

company objectives are as follows:

1. To earn at least 20% after-tax rate of return on our net investment during this year.

2. To make our cookies the best selling cookies in terms of units sold in the province ofBritish Columbia.

12Vancouver Board of Trade. Available online at: http://www.boardoftrade.com/vbot_page.asp?pageid=30

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Types of Objec t ives

1. Profitability

net profit as a percent of sales;

net profit as a percent of total investment; and net profit per share of common stock.

2. Volume

market share;

sales or percentage growth in sales;

sales rank in the market; and

production capacity utilization.

3. Stability

variance in annual sales volume; variance in seasonal sales volume; and

variance in profitability.

4. Non-Financial

maintenance of family control;

improved corporate image;

increase public awareness of product lines;

enhancement of technology or quality of life;

production or processing facilities;

innovation, enhanced quality; and improve research and development.

Each objective should meet the following basic criteria:

Suitable: Do they fit with the corporate mission?

Measurable: What will happen and when?

Feasible: Are they possible to achieve?

Acceptable: Do they fit with the values of the company and the employees?

Flexible: Can they be adapted and changed should unforeseencircumstances arise?

Motivating: Are they neither too difficult nor too easy to achieve?

Understandable: Are they stated simply?


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Commitment: Are people committed to doing what is necessary to achievethem?

Participation: Are the people responsible for achieving the objectivesincluded in the objective setting process?

Further Examples of Objectives:

To achieve 10% market share by end of the first year To increase sales 5% each year To reduce customer complaints to 10% of all sales To generate sales of $100,000 by end of third year

Companies need to ensure that they do not set too many objectives. When too manyobjectives are set, the company runs the risk of having objectives contradict andinterfere with each other.

It is a good idea to consult with various stakeholders (i.e. investors, employees,suppliers and distributors) when designing your objectives. The more involved peopleare in the decision making process, the better chance you have at reaching your goals.It is important for different parties to share your companys goals and buy into yourideas.


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St age 3: Com pet i t i ve St ra t eg ies

nce a company has determined its objectives, a competitive strategy canbedeveloped. Acompetitive strategy is developed so that a company can createadvantages over the competition. Examples of creating a competitive strategyinclude:

offering buyers a standard product at a lower price;

making the product different from the competition on attributes consideredimportant to the customer;

pursuing distribution and service opportunities that differentiate the company;or

pursuing attributes that are considered important to the customer.

Types of Compet i t i ve St ra teg ies

Overall Cost Leadership

This refers to being a low cost manufacturer and should not be confused with setting lowprices. Cost leadership can be achieved by:

producing on a large scale;

designing products that are easy to manufacture;

accessing low cost raw materials;

producing a broad range of products; or

pursuing cost reductions in production, marketing, research anddevelopment, customer service, and the avoidance of marginal accounts.

Differentiation

Differentiation involves changing the product so that it is perceived as unique. It can bebased on:

technical superiority;

quality;

customer support services; or

the appeal of more value for the money.

Niche Marketing

Niche marketing occurs when a product is sold to a small number of the total potentialcustomers. The specialty market is often referred to as niche marketing since productsare marketed to a very small group of buyers. Niche marketing requires the businessowner to identify customers with similar demands and serve their needs extremely well.

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Niche marketing implies that a company will take a lower overall market share, butpossibly with higher profits on the product. Higher profits may be achieved by havinghigher prices or producing at lower costs.

St age 4: Market ing Objec t ives

arketing objectives can only be developed after stages one through threehave been completed. Marketing objectives are designed to help a companyattain its overall objectives.

Some basic marketing objectives include:

to achieve a viable level of sales or market share;

to increase market share;

to maintain market share;

to maximize cash flow; or

to sustain profitability.

Market share is a common term used in developing marketing objectives and refers tothe percentage of the total industry sales that your company will attain. For example, if acompany sells 100 units of product but total consumption for the good is 100,000 units,the market share is 0.1% (100/100,000).

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St age 5: Market ing St ra t eg ies

arketing strategies outline exactly how marketing objectives will be achieved.For example, if the marketing objective is to increase market share, themarketing strategy states exactly how the market share increase will occur. Amarketing strategy is a way to give marketing orientation to a business by

deciding to position a product or service in terms of buyer needs and wants.Inexperienced business people often make decisions based on what they like or want,leaving the customer out of the picture. A marketing orientation brings the customer intothe centre of the picture.

The marketing objectives for profits, cash flow and market share can be achieved byincreasing the number of users, increasing the rate of purchase, retaining existingcustomers, or acquiring new customers. The following are examples of various types ofmarketing strategies.

1. Increase the number of users by:

increasing their awareness of your product;increasing their willingness to buy; or

increasing their ability to buy.

2. Increase the rate of purchase by:

broadening the customers usage occasions for the product;

increasing their level of consumption; or

increasing their rate of replacement.

3. Retain current customers by:

maintaining their satisfaction;

meeting or exceeding what the competition offers; or

through relationship marketing.

4. Acquire new customers by:

expanding distribution (developing new distribution channels);

line extensions (developing new products or variations of existing productsdesigned for existing markets);

leaders (lower prices on certain products to increase the sale of more expensivecomplements);

bundling (selling products together usually at a lower price than if boughtseparately);

head-to-head market dominance;

head-to-head price/cost leadership;

differentiating the product;

serving a narrowly defined target market; or

flankers (new brands designed to serve new segments).

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St age 6: Mark et ing Program s

Marketing programs are the detailed approaches to the 4 Ps (pricing, product, place,and promotion). The approach for making decisions for each of the 4 Ps should closelyfollow the mission statement, company objectives, competitive strategies, marketingobjectives and marketing strategies. Specifics relating to product, place (distribution),promotion, and pricing have been outlined in:

Section 9 - Product: Developing a Quality Product;

Section 10 - Pricing;

Section 11 - Promotion; and

Section 12 -Place: Distribution of a Product.


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St ra teg ic Marke t ing Flow c har t

The following chart provides an overview of the strategic marketing process.

Dia nosis

Decisions

Im lementation

Mission

Define the Business

Gathering Information

Objectives

MarketingStrategies

CompetitiveStrategies

MarketingPro rams

DecisionPoint

Go

No Go

Long Term Evaluation(3 Years)

Short Term Evaluation

and Annual Assessment

- Increase the number of users- Increase the rate of purchase- Retain current customers

- Acquire new customers

- Differentiation- Cost Leadership- Focus

- Profit- Volume

- Stability

- Non-Financial

- Product- Distribution- Promotion

- Pricing

- Business Environmental Analysis- Customer Analysis- Competitor Analysis- Internal Analysis


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Addi t iona l Rec om m ended ReferencesBangs, David H. The Market Planning Guide: Creating a Plan to Successfully MarketYour Business, Products or Service. Dover, NH: Upstart Pub. Co., 1995.

Davidson, Jeffrey P. Marketing on a Shoestring: Low-cost Tips for Marketing Your

Products to Services. New York: John Wiley, 1994.

Davidson, Patricia G. Direct Marketing: A Handbook for Farm Producers. CanadianFarm Business Management and the Ministry of Agriculture and Food, 1994.

Gerson, Richard F. Marketing Strategies for Small Businesses. Menlo Park, CA.: CrispPublications, 1994.

Gunner, Andrea. Preparing a Business Plan: A Guide for Agricultural Producers DirectFarm Marketing Example. BC Ministry of Agriculture, Fisheries and Food andAgriculture and Agri-Food Canada. Available online at:http://www.al.gov.bc.ca/busmgmt/bus_guides/direct_guide.htm

Luther, William M. The Marketing Plan: How to Prepare and Implement It 3rd Ed., New

York: Amacom. 2003.

Marketing Guide. Small Business BC. 2004. Available online at:http://www.smallbusinessbc.ca/pdf/marketingPlan.pdf

Opportunity Analysis for Farm-Based Businesses: Final Report. Prepared by StrategicPartnerships. In Association with Peter Williams and J. Paul and Associates, Inc., 1997.


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Marketing Checklist

Write my mission statement. Does it say everything itshould?

Set my one year and three year objectives. Should mycompany focus on profits, volume, stability, orsomething else?

Set my competitive strategies so that I can reach myobjectives. Make sure they complement my missionstatement.

Complete my marketing plan with marketing objectivesand marketing strategies. Make sure everything isconsistent with achieving the company mission.

Address the four Ps of marketing (Price, Place,Promotion and Product)

Design a strategic marketing flowchart.

08 marketing

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